Sounds like the OP understands how it works just whether or not it's necessary. My machinist who did my 360 said if I was planning on not going much over 4500 rpm the dynamic balancing isn't needed, but since my long-term plan is to get it redlining around 6000 rpm I got it done. Helps it run smoother too, and if I remember correctly it wasn't more than $300 or so for both staticand dynamic balancing service.
I'm not familiar with VW boxer-style engines but I know on cross-plane crank V8s (all old American engines) the counterweights are very important and need to be as close to the measured bob-weights as possible or else it puts a lot of strain on the crank. This is unique to this configuration of engine, other types with flat-plane cranks, inline 6's, etc. that dynamic balancing isn't as crucial. At least that's my understanding...
